Major projects hot up

By Linus O’Brien, Principal Supply Chain Consultant for the Industry Capability Network WA, run by CCIWA.

The year has started with great prospects for project work with our biggest export – iron ore – leading the multi-billion dollar charge.

BHP’s South Flank project is already underway, Rio Tinto’s Koodaidari project is about to commence construction and will be followed by upgrades to its Robe Valley and the West Angeles projects, while Fortescue’s Eliwana project is also starting construction.

This time last year South Flank was in feasibility status and Rio Tinto hadn’t committed to any of its projects, which were still in the design stage.

With the ‘go’ button now pushed on a number of projects, that’s the important difference between where we are now compared with a year ago.

The other pleasing aspect from our forward work has been the development of the Front End Engineering and Design (FEED) work in the oil and gas area.

If we look at Woodside, it has the Scarborough/Pluto expansion project with Bechtel confirmed as the FEED contractor for Pluto, which could lead to the potential contract for building of the Pluto extension.

Woodside’s plan to develop the remote Browse gas fields LNG project is also a significant opportunity, which will generate a fair bit of initial FEED work, followed by actual work once it gets the go ahead.

Shell’s floating LNG Prelude platform is about to process its first LNG, so companies that have been waiting for it to start from an operational and maintenance point of view, it’s not far off. Shell has also committed a FEED for the Crux project, which will supply gas to Prelude.

Crux and Scarborough will both create major subsea work.

This is certainly good news for WA companies across many sectors, not just construction, but also the suppliers of goods and services that feed into the construction activity.

With the work starting up, many companies are going to say, “where is my slice of the action?”.

The ICN gateway is important because it allows subcontractors to list their interest as a partial scope supplier, so once the main package is listed as an ‘Expression of Interest’, any partial scope supplier can see where they might fit in and, importantly, they can consider who the major contractors are that could be potentially short listed.

It’s also a golden opportunity to start the communication process between suppliers and major contractors.

When it comes to tendering, we see a number of key elements that companies could improve on. The two main ones include:

Clearly understand your financial capacity to undertake the potential works, whether that’s as goods or a service. There is no doubt the contracts and procurement people making a decision on the successful contractor are going to be looking at the financial capacity of your company to undertake the work.

If your company has experience in the scope of works, it’s important to bring that to the fore. We quite often see too many superlatives about capability and capacity while the vital point of clearly articulating your experience and how it will meet the scope of works is neglected. I can’t overemphasise how important this is.

We’ve got to realise that most of the businesses we operate in today are smaller than they were even just a few years ago, so time is important to everybody and contracts and procurement people have a very difficult task.

They have limited time to shortlist, tender, review the tender and issue the purchase order and, of course, their timing is critical. If the purchase orders are not issued in the time frame required that can potentially affect the scheduling of the whole project.

So, companies who can show clearly how they match the scope of work will have a much better chance of getting to the top of the list.

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